Public investments in R&D as a tool for regional economic development: under which circumstances do the European Union’s Structural Funds investments on research achieve their objective to contribute to economic convergence of regions?

Abstract

In the last decade the endogenous growth theory has been said to have found into the difference of endowment of knowledge that different regions possess both an explanation of semi permanent differences in prosperity levels and, consequently, a recipe for eliminating the gaps. The theory had significant policy consequences and the impact was particularly large on the European Commission when it was decided to drastically increase the share of structural funds – the money meant to produce economic convergence of regions – into R&D. However, statistical data show a weak correlation between R&D expenditure and economic growth acceleration, and more specifically, the correlation becomes even weaker if applied to EU poorer regions. More precisely, the evidence suggests that R&D programmes can display different returns. This work wants to be contribution to better understand the reasons that lie behind these differences. The research tests an hypothesis described through a framework that we called innovation value chain. The result is that better performing innovation strategies are associated to: a more concentrated allocation of available resources and a higher capability of the initial public investments to stimulate further private investments; a clearer distribution of responsibilities for decision making over structural funds programmes and independence from policy making of the implementation processes of the programmes; a presence of partnerships amongst business, universities, government and public opinions that pre exist the implementation of the programmes and are based on specific per projects objectives. The analysis is carried out through case studies that compare similar OB 1 programmes in regions that were similarly endowed as far as R&D assets at the beginning of the 2000 – 2006 programming period and that, yet, showed opposite results and patterns of economic growth